R-Calf Point To Problems With Currency Manipulation In International Trade
WASHINGTON, D.C. – To further its membership-established policies, R-CALF USA joined with the Coalition for a Prosperous America (CPA), the Organization for Competitive Markets (OCM), and Dakota Rural Action (DRA) to urge the Senate Banking Committee to support S. 1677, a proposed bill that would effectively address currency manipulation in international trade.
2 August 2007
2 minute read
“It is our understanding this amendment may be offered during tomorrow’s Senate Banking Committee hearing,” said R-CALF USA Trade Committee Chair Eric Nelson. “We understand this bill will allow both countervailing and anti-dumping duties to neutralize intentional, or unintentional, currency misalignment and would be a major first step toward decreasing the U.S. trade deficit.”
“U.S. farmers and ranchers cannot compete with other governments, but can compete with producers in other countries given a level playing field.
R-CALF USA Trade Committee Chair Eric Nelson.
In a joint letter sent today, the groups stated that Asian nations – including China – prevent their currency values from responding to market forces. For 13 years, the U.S. Treasury Department has reported that neither China, nor any other country, manipulates currency for the purpose of achieving unfair trade advantages, but that position generally is not deemed credible.
“The distinction between intentional currency manipulation and unintentional currency misalignment is rooted in diplomatic concerns, and this distinction should be eliminated because the effect is the same,” Nelson continued.
The letter states that it is generally agreed that China devalued its currency (remnimbi) in relation to the U.S. dollar by about 40 percent in 1995, and has pegged the remnimbi value to the dollar since that time. China’s economy has seen explosive growth in size and in exports since 1995 which, in a flexible currency regime, would cause the remnimbi to gain in value. However, the remnimbi value has remained relatively constant, in a gravity-defying feat. The result is a 12-year period in which all China products have had a 40 percent export price advantage, although estimates vary between 9 percent and 57 percent. Conversely, U.S. exports to China are 40 percent more expensive than they should be.
“This affects the entire U.S. economy, including agriculture,” Nelson pointed out. “U.S. farmers and ranchers cannot compete with other governments, but can compete with producers in other countries given a level playing field. The U.S. is now a net food importer, in large part because of unfair international trade practices.
“S.1677 will expand the anti-dumping remedy contained within a bill first approved by the Senate Finance Committee, and it includes countervailing duties while taking Treasury diplomacy out of the mix,” Nelson concluded. “Farmers and ranchers across the country request objective and effective action to reduce and ultimately eliminate the trade deficit.”
In 2004, R-CALF USA members voted the following policy into place: “R-CALF USA requests the Administration to use existing laws to correct currency manipulation by trading partners who have taken action to under-value their currencies vis-à-vis the U.S. dollar.”
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